Mayor Fred Eisenberger, staring at a proposed 4.4 per cent tax hike, says he "desperately" wants a zero per cent increase but recognizes the need to ask taxpayers for more money this year to "keep the city from falling apart."
Eisenberger wouldn't say what percentage he thinks taxpayers will end up paying, but said the city needs to start chipping away its massive infrastructure deficit — estimated at nearly $200 million per year.
"Infrastructure. It's a big issue. It's looming. It's hanging over our heads," Eisenberger told the General Issues Committee.
"I'm asking: how can we do more?"
'We're all realizing that our ability to pay for things down the road is going to be diminished'- Chris Murray, Hamilton City Manager
The budget debate will continue next week, but Friday's discussion highlighted several key issues, including the unsustainable reliance on reserve funds in recent years, a small commercial tax base and a lack of support from higher levels of government.
During the last council term, the average property tax increase was 1.3 per cent. If the proposed 4.4 per cent hike goes ahead this year, the average homeowner would pay $3,214, up from $3,078.
Other fees are also set to go up, including your water bill which will rise 4.2 per cent, or about $24 on a typical bill.
City Manager Chris Murray showed a chart showing Hamilton residents are in the middle of the pack when it comes to the percentage of family budgets devoted to paying property tax (at just over 4 per cent).
"We're all realizing that our ability to pay for things down the road is going to be diminished," Murray said, pointing out the city's aging population may have less money in the future.
Mike Zegarac, the city's general manager of finance, also warned the city is fairly limited when it comes to revenue tools, hence its need to rely on raising property taxes.
With such a large disparity between tax increases, several long-serving councillors defended their past budgets, particularly around the issue of using reserve funds.
"We made significant investments with reserves," said long service Ward 6 Coun. Tom Jackson, who also pointed out the previous council faced several significant challenges.
Zegarac highlighted several above-average capital expenditures, including long-term care home improvements, the stadium development and improvements to the city's waterfront.
Coun. Sam Merulla, meanwhile, pointed out the city's obligations to pay for provincial programs as well as the costs "downloaded" onto the city by provincial and federal governments.
After new Ward 9 Coun. Doug Conley warned council needs to look at Hamilton like a house and "bite the bullet and fix the roof," Merulla replied at the city budget level you're not only fixing your own home but "paying for your neighbour as well."
Another emerging issue is the city's reliance on revenue from its residential tax base rather than commercial. Zegarac said Hamilton's balance is about 87 per cent residential to 13 per cent commercial — trailing the municipal average of 83 per cent residential and 17 per cent commercial, a ratio achieved by both Burlington and Markham.
That ratio matters because on balance, the city benefits more from taxing businesses than homeowners.
City staff are set to provide an update on how the city generates revenue in the coming weeks.
Council is also set to gets its hands on a study by accounting firm KPMG that details the costs passed down onto the city by the federal and provincial government.
Eisenberger said he's hoping to see the report "sooner than later," especially during a federal election year when he can use it to press campaigning politicians.
"We can't just blame. We have to actually quantify and identify," Eisenberger said of the cost-downloading.
MPs, he said, "need to know what the burden is, too."
At the city level, Eisenberger said his goals are simple: don't add new services, maintain the services the city has, and be more aggressive in tackling infrastructure issues.
Later in the day, the General Issues Committee also discussed utility and water rates, as well as service fees. All decisions made at the GIC will eventually go before the full council.
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